The Role of the Media in the Launch of Internet Ipos

28 Pages Posted: 18 Apr 2006

See all articles by Utpal Bhattacharya

Utpal Bhattacharya

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Neal Galpin

Monash University - Department of Banking and Finance

Xiaoyun Yu

Indiana University - Kelley School of Business - Department of Finance; China Academy of Financial Research (CAFR)

Rina Ray

University of Colorado at Denver

Multiple version iconThere are 2 versions of this paper

Date Written: May 24, 2006

Abstract

We document that there was media hype about internet stocks during the bubble. However, the media hype about internet stocks during the bubble was discounted: though the media coverage positively affected pre-IPO value revisions, it affected internet IPOs more than non-internet IPOs only after the bubble burst. Further, though the pre-IPO media coverage positively affected first-day returns only after the bubble burst, the effect on the internet IPOs was the same as the effect on the non-internet IPOs. This suggests that the media affect prices more in primary markets than in secondary markets. In both cases, the impact of the media is higher during bust times than during boom times.

Keywords: Initial public offering, media, underpricing, internet bubble

JEL Classification: E32, G14, G30

Suggested Citation

Bhattacharya, Utpal and Galpin, Neal E. and Yu, Xiaoyun and Ray, Rina, The Role of the Media in the Launch of Internet Ipos (May 24, 2006). Available at SSRN: https://ssrn.com/abstract=897031 or http://dx.doi.org/10.2139/ssrn.897031

Utpal Bhattacharya

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

Clear Water Bay
Kowloon
Hong Kong

Neal E. Galpin (Contact Author)

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Xiaoyun Yu

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3521 (Phone)
812-855-5875 (Fax)

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

Rina Ray

University of Colorado at Denver ( email )

Box 173364
1250 14th Street
Denver, CO 80217
United States
303-315-8455 (Phone)

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